Oil prices have rebounded after hitting a one-month low in the previous session. As of 0512 AM WAT on Wednesday, Brent crude futures rose by 27 cents, or 0.43%, to $62.75 a barrel, while US West Texas Intermediate crude futures gained 24 cents, or 0.41%, to $58.19 a barrel.
The surge in oil prices comes after a decline on Tuesday, which was triggered by Ukrainian President Volodymyr Zelenskiy’s announcement that he was ready to advance a US-backed framework for ending the war with Russia. The potential deal, if finalized, could lead to the removal of Western sanctions on Russian energy exports, which might drive down oil prices. According to IG market analyst Tony Sycamore, this could potentially lower WTI prices to around $55.
The market is currently awaiting more clarity on the situation, but the risk appears to be skewed towards lower prices unless the talks between Ukraine and Russia falter. US President Donald Trump has directed his representatives to meet separately with Russian President Vladimir Putin and Ukrainian officials, while a Ukrainian official has stated that Zelenskiy may visit the US in the coming days to finalize a deal.
In recent weeks, Britain, Europe, and the US have tightened sanctions on Russia, increasing pressure on the country. Additionally, Russian oil purchases by India, a key buyer, are expected to hit their lowest level in three years in December.
Meanwhile, US crude stocks fell last week, while fuel inventories rose. The Energy Information Administration is set to release official stockpile data on Wednesday, which may provide further insight into the oil market. Crude prices have also received some support from expectations of a potential US Federal Reserve interest rate cut in December, following economic data releases showing lower retail spending and softer inflation. A rate cut would likely stimulate economic growth and bolster demand for oil.
The developments in the oil market are being closely watched, as they have significant implications for the global economy. As the situation continues to unfold, investors and analysts will be looking for more clarity on the potential deal between Ukraine and Russia, as well as the impact of US monetary policy on oil demand.